Canadian exports fell for a third month in a row, as the country’s trade deficit increased in August, Statistics Canada says today. The trade deficit came in at $3.4 billion for the month, compared with a $3 billion deficit in July.
The increase came as overall exports slipped 1% to $43.6 billion in August. Export volumes fell 1.9% for the month. Imports were virtually unchanged in August at $47 billion.
Despite the fact that exports have dropped for the third straight month, the Minister of Finance is pleased with Canada’s economic situation.
Bill Morneau met with private sector economists in Toronto this morning, and says the consensus was that the economy is in a better place than would have been expected a year ago. His message to exporters is that opportunity remains out there, and he expects the economy to continue to be “in a positive situation.”
A recent Scotiabank Global Economics report mirrors Morneau’s sentiments. It states that Canada’s growth is expected to hit an unsustainable 3.1% during 2017.
But one economist may disagree. “In case there was any doubt that peak Canadian growth is behind us, [the Statistics Canada] all but cements the case,” notes Bank of Montreal senior economist Robert Kavcic.
The Canadian economy roared through the first six months of the year. The strength helped prompt the BoC to raise its key interest rate target twice; however, the pace of growth is expected to slow in the second half of the year.
Kavcic says the trade results were “another argument for the Bank of Canada to take a breather.”
The larger trade deficit came as exports of consumer goods and basic and industrial chemical, plastic and rubber products, as well as metal ores and non-metallic minerals moved lower. Exports excluding energy products were down 1.4%, notes Statistics Canada.
Meanwhile, imports of motor vehicles and parts climbed 2.5% to $9.3 billion, while metal ores and non-metallic minerals rose 9.9% to $1.2 billion.
Imports of consumer goods fell 1.8% to $10.1 billion.
Even though exports have declined, young entrepreneurs are trading more than ever, finds a CIBC poll. In fact, 72% of Canada’s small business owners aged 25 to 39 export goods and services, with many increasing their focus on international growth in the last five years
TD Bank economist Dina Ignjatovic says, going forward, a healthy U.S. economy should help to prop up demand for Canadian-made goods, supporting export volumes.
“However, the appreciation of the loonie since early September has somewhat reduced the competitiveness of Canadian exporters and could provide some offset,” Ignjatovic wrote in a note to clients. “The outcome of the NAFTA renegotiations also poses some risk, but with negotiations moving slowly, it is unlikely to impact trade this year.”
Canada’s trade surplus with the U.S. narrowed to $2.3 billion in August, compared with $3.2 billion in July as the Canadian dollar strengthened relative to the U.S. currency.
The country’s trade deficit with countries other than the U.S. slipped to $5.7 billion in August compared with $6.2 billion in July.